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Sunday, June 2, 2013

More on Sovereign Default

DB: If the Eurocrats are raising a generation that simply
does not believe in regulatory democracy because they have seen it doesn't
work, then where does that leave the great federal experiment?

BM: Sovereign defaults - not merely via inflation; not
merely by minor reductions in social programs. Real write-offs; true debt
restructuring. This will be all that is left if some version of regulatory
democracy is to survive, as defaults will be necessary to continue the social
benefits that pacify the people.

I view it as part of an overall package - one that can
extend the system for an unknown period of time:

1)The politicians stick it to the bankers and the
rapacious rich by defaulting on the bonds and confiscating the uninsured
portion of deposits, while protecting the bank accounts of the regular guy.

2)The politicians state that this is part of an
overall solution - means testing for various social benefits, later retirement
age, higher taxes for all - especially the rich, etc.

3)This could be sold to the masses because they
see the rich getting skewered (on the surface, of course, as in reality the
non-elite rich also benefit greatly from the continuance of regulatory
democracy).

Do I see it as a permanent solution? No, certainly not. Could it buy a few decades? Sure, why not?

Soon enough, the sovereigns will be able to borrow again;
they have the system set up to do so, and a sovereign entity - backed with
legalized force and no debt on the books - makes for a great creditor.

The loss of faith in regulatory democracy by the masses is
likely the worst outcome for the elite - and faith will be lost if the social
promises are completely broken. I cannot come up with any better way in which
they will be able to extend the situation, and therefore maintain the faith, until
they come up with a new system.

It is clear they do not have something new yet to replace
the current system - if they did, they would have unveiled it by now; the world
is ready to welcome a savior. The elite need to play for time.

My guess is that carbon taxes tied to global warming was
intended to be the "new." A new global tax to usher in a new global
currency. Sadly for the elite, that scam blew up almost exactly when the
current financial system did. I suspect they have been juggling chain saws ever
since.

Instead of a total default, what if the default is limited
to central bank holdings and other cross-government holdings? What do the elite care if central banks take a
bookkeeping hit?Is there even any
consequence to a central bank going bankrupt if the legislative branch allows
the bank to continue to operate?

The assets of the elite are tied up in real things - land,
gold, income producing investments, etc. As long as the structure remains in
place, what difference does a write off of debt owed to the central bank make
to them?

They want the structure to remain in place, over and above
any other objective. It is the structure that is the source of their control.
It is the control that is the source of their ability to skim wealth from the
rest of us.